Using longer term loans 35-40 yr.

I am wondering if any of the investors on here use longer term loans, to help a property cash flow better? It seems if you mortgaged the property over a longer period of time you would just be using OPM for longer and would free up your cash reserves more?

I’m trying to move toward less years, my last 2 properties are both on 15 year mortgages. I don’t cash flow as much as I could but I’d rather own the property free and clear sooner and see a majority of the rent in my pocket.

On another note it’s probably easier to increase cash flow using longer terms but what’s the difference in purchase price so that you could acheive the same cash flow at 15, 20, or 30 year terms. Figure that out and in some instances it may be more beneficial to negotiate the price a bit harder.

Just my 2 cents,


Run the numbers.

A 200K mortgage at 6% would run you $1,199 for 480 months.

A 200K mortgage at 6% would run you $1,100 for 360 months.

You free up $99.00 every month, but how much are you paying?? $1,100 for 120 more months or $132,000.

That’s a lot of money for a measely $99.00/month

Negotiate a little harder, pay 15K less for the property, with a 185K mortgage at 6%, and you’re down to paying $1,109/month, for 360 months.

Hi Frank,
My husband and I are newbies to REI. We are in the process of selling our principle residence. We plan to relocate to the US from British Columbia very soon. Any advice for us. You, as well as others really seem to know your stuff. Can you offer suggestions on what tools we should have at our disposal for example… investors suggest newbies to view 100 properties when first starting out, but do run the comps do you know of a program that can help us. I guess I’m thinking could get very expensive to have so many apprasials and Realtors don’t have time for running 100 comps.

your thoughts?

Thanks in advance

I would say draw up amortization tables for a 30, 35 and 40 year loan (use your your handy financial calculator, or some website like…and see what happens if you take a 40 year loan, and pay on it (monthly) at the rate of a 30 year loan…and you might wind up paying it off in less than 30 years. Now if that does prove to be a better deal, try calculating what it would take to pay it off in 20 years. If you could make the monthly payments as if you had a 20-year note, on a 40-year note, you could probably pay it off even way sooner. Plus if you ever hit financial hard times, just make the smaller payment for a few months until you get your finances straightened out. Cool, eh? Damn I love money.